Drop shipping is a distribution method primarily used by online businesses to fulfill customer orders from their e-commerce web site. With a dropship program, the retailers do not carry any stock, instead all of the products are held as inventory by wholesalers or sometimes even the manufacturers. Right after an order is placed, the online retailer receives shipping information and payment then transfers the customer order to the drop shipper to be completed. The drop shipper is then responsible for shipping all of the items that have been ordered out to that customer. The online retailer earns the profit margin from the wholesale price and retail price.
Drop shipping is a great way to start an e-commerce business if you don't have much upfront capital. In fact a number of home based businesses have grown to be very successful using this technique to sell online. The first thing you need to do is find suitable vendors to get involved with. There are a wide variety of vendors to choose from, but they are not all reliable. The first step seems relatively easy, but the fact of the matter is that finding a suitable vendor for your dropship program can either make or break your business. You should focus on researching all applicable vendors and choosing ones that you feel would work well with you. Consider it a partnership, you handle the first part of the order and they take care of the rest. The only way to have a successful e-commerce business with satisfied customers is if both parts of the system work well together.
The first step is coming up with a list of possible vendors to include in your dropship program. Find vendors that supply products you are looking to sell in your online store and then check to see if it is well established and reputable. How long have they been in business? Can they deliver what they promise? Are you able to make a profit based on the price you are getting the products for? After you picked out the best ones, contact them to inquire about their services and try to order a few products. Then narrow it down by comparing the product quality, the delivery time, how fast they respond to inquiries and how well they are able to customize the packing slip and shipping label to match your business logo.After making your decision on which vendors to use, you have to make sure that your e-commerce solution is capable of managing your dropship program. Make sure the following features are provided:
- QuickBooks integration for simple POS management and tracking
- Create unlimited amount of vendors
- Automatically contact vendors when their products are ordered
- Shipping is calculated in real time based on drop ship location and carrier
- Admin log-in area for vendors to add products or update inventory
People usually decide to use a dropship program for their business, because of the freedom it offers and low level of risk involved. There are a few disadvantages such as not being able to control the merchandise and not being the only retailer they work with. However there are also a number of advantages for creating this type of business. Here are just a few:
- Little to no inventory
- Saves time by letting someone else fulfill the order
- Saves money by not requiring a lot of overhead cost
- Product images and details are supplied by the drop shippers to use on your website
- Large variety of products to choose from which gives you the ability to sell more than you normally would
Finding an ecommerce solution with an efficient and reliable
drop ship tool is critical to the success of your online retail business. You can't simply hope for reliable drop ship vendors, the best way to guarantee that they are properly doing their job is to have the ability to track and manage their activities from your store admin.
